DSL Wars Pummel Earthlink

That Americans want broadband is without question. Everyone of the mainline broadband providers – Comcast, SBC, Time Warner, BellSouth and Verizon have reported healthy growth rates for new subscribers. However, there is dark lining on the silver cloud. I saw it in Earthlink’s latest quarter earnings. Thanks to David Jackson, who popped me an email to point out the bomb dropped on Earthlink’s earnings conference call. Earthlink CEO Gary Betty said:

Our ADSL ARPUs are declining, they were a little over $50 at the beginning of last year and probably will be in the mid-40s, maybe 43-44 by the end of next year… Bell South was pretty aggressive in Q3 and Q4 with a $9.95 option for a 256K product. SBC continues to be the most aggressive of the ILECs and pursuing promotional pricing to do that…

This could potentially be a big problem for not only the bells, but also for companies like Covad. I am also hearing that folks at big bell operators are all set to crank up the speeds on their DSL pipes, and probably dropping the prices on low-end/lower-speed offerings.